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Net Office Space Absorption Seen at 31 Million Square Feet in 2015

New Delhi: Net absorption of office space is expected to be about 31 million square feet this year in the country’s seven major cities as sentiments have improved in commercial real estate market, a study has said.

The study was conducted jointly by industry body Assocham and property advisory firm JLL.

With an improvement seen in occupiers’ sentiment in the commercial real estate sector, the net absorption of offices spaces in India is expected to be about 31 million square feet by end-2015, Assocham said in a statement.

The supply is estimated at 34 million square feet during this year.

“A total of about 34 million square feet of office space is expected to become operational in 2015 and India’s office stock is likely to settle at 440 million square feet by end-2015,” the statement said.

Assocham Secretary General DS Rawat said: “With a pro-business government at the Centre, the office sector is expected to see a lot more traction and various multi-national (MNC) occupiers and investors entering the country.”

The study highlights there is a window of opportunity for the occupiers and investors as rents and capital values in most of the micro-markets are at their cyclical bottom.

Select micro-markets of cities still offer attractive rents compared to its peak, while several of them have already shown signs of revival due to strengthening demand for office space, it added.

Vacancy rates are likely to be in the range of 15-18 per cent by end-2015, the study points out.

In terms of supply of newly completed office spaces, Delhi and NCR is showing a forecast of 10 million square feet. While Mumbai and Bangalore are expected to inject about six million square feet and about 8 million square feet, respectively, of new office spaces.

Against this supply, Delhi and NCR, Mumbai and Bangalore are forecast to record net absorption of 6.1 million square feet, about seven million sq ft and 7.6 million square feet, respectively.

Mumbai is expected to lead the country in terms of total operational Grade-A office stock of 100 million square feet by the end of this year followed by Bangalore (92.6 million square feet).